2019 (5) TMI 1068 - HC - Income Tax

Tax Court affirms non-resident's deduction claim for property investment in USA under Income Tax Act

The High Court upheld the decision of the Income Tax Appellate Tribunal (ITAT) in favor of the Assessee, a non-resident who invested in a residential ... Deduction under Section 54 /54F - investment was made in a residential house outside India - Assessee is a non-resident settled in the United States of America - HELD THAT:- The legislative intent has been made explicit by inserting the amendment to require to purchase/construction of the residential property in India only with effect from 1st April 2015. As rightly held in LEENA JUGALKISHOR SHAH VERSUS ASSTT. COMMISSIONER OF INCOME TAX. [2016 (12) TMI 351 - GUJARAT HIGH COURT] “prior to amendment to Section 54F of the Act, the only condition stipulated was investment in a residential house. When the Section 54F of the Income-tax Act was clear and unambiguous, there is no scope for importing into the statue the words which are not there. Such important would be not to construe but to amend the statute. If there is any defect in the Act, it can be remedied only by the legislation and not by judicial interpretation”. Assessee further points out that the above decision of the Gujarat High Court has been accepted by the Department, as is noted by the Authority for Advance Ruling in Dipankar Mohan Gupta, In re AAR [2018 (1) TMI 947 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI] Thus Court finds that the ITAT has committed no legal error in allowing the appeal of the Assessee. Issues:1. Whether the claim of the Assessee for deduction under Section 54/54F of the Income Tax Act, 1961 can be allowed when the investment was made in a residential house outside India for the Assessment Year 2013-14.Analysis:The High Court heard an appeal by the Revenue against an order passed by the Income Tax Appellate Tribunal (ITAT) regarding the Assessee's claim for deduction under Section 54/54F of the Income Tax Act, 1961. The Assessee, a non-resident settled in the United States, sold a property in New Delhi and invested in a residential property in Boston, USA. The Assessing Officer disallowed the claim as the property was outside India. The ITAT, considering the amendment effective from April 1, 2015, and following a decision of the Gujarat High Court, allowed the Assessee's appeal. The Revenue argued citing a Supreme Court decision but the Court differentiated the contexts of exemptions under different sections of the Act, emphasizing the legislative intent behind the amendment to Section 54F.The Court noted that prior to the amendment, the requirement was only investment in a residential house without specifying the location. The Court emphasized that it is not the role of judicial interpretation to amend the statute and that any defects should be remedied through legislation. The Assessee's counsel highlighted that the Revenue had accepted the decision of the Gujarat High Court in another case. Consequently, the Court found that the ITAT did not commit any legal error in allowing the Assessee's appeal. The Court concluded that no substantial question of law arose, and hence, dismissed the appeal.